Test Bank For Business Essentials, Eighth Canadian Edition 8th Edition

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TESTITEMFILEFred StarkeBusiness EssentialsEighth Canadian EditionRonald J. EbertRicky W. GriffinFrederick A. StarkeGeorge Dracopoulos

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-1Chapter 1Understanding the Canadian Business System1.1Multiple-Choice Questions1) Profit isA) what remains after business expenses are subtracted from business revenues.B) what remains after dividends have been paid to stockholders.C) equal to total revenue minus cash expenses.D) what remains after income taxes have been paid.E) double the amount the company pays in.Answer: ADiff: 1Type: MCPage Ref: 5Skill: KnowledgeObjective: 1.12) What are profits?A) Total money taken in by a corporationB) Increases in income from year to yearC) Increases in a corporation's stock priceD) Revenue generated by goods and servicesE) Difference between revenues and expensesAnswer: EDiff: 1Type: MCPage Ref: 5Skill: KnowledgeObjective: 1.13) Profit isA) the market value of shares of stock in a company.B) the level of expenses divided by the firm's assets.C) what remains after business expenses are subtracted from business revenues.D) gross revenue minus taxes a company pays.E) gross sales minus taxes a company pays.Answer: CDiff: 1Type: MCPage Ref: 5Skill: KnowledgeObjective: 1.1

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-24) This week, Abe's Muffler Shop had sales of $4000, employees were paid $1000, the cost ofgoods was $1500, and rent was $500. Profit for the week wasA) $3000.B) $1000.C) $4000.D) $2500.E) $500.Answer: BDiff: 2Type: MCPage Ref: 5Skill: ApplicationObjective: 1.15) How are provincial universities in Canada different from business firms?A) They do not seek to make a profit.B) They deal with people, not things.C) Their organizational boundaries exclude business firms.D) They do not produce goods or services.E) They are more important to society than business firms.Answer: ADiff: 2Type: MCPage Ref: 5Skill: ComprehensionObjective: 1.16)Forbesmagazine ranked 134 countries in terms of how attractive they were to do business in.Where did Canada rank?A) FirstB) SecondC) FifthD) Twenty-fifthE) Eighty-seventhAnswer: ADiff: 2Type: MCPage Ref: 5Skill: KnowledgeObjective: 1.17) Examples of businesses include all of the followingexceptA) local supermarkets.B) one-person businesses, like barbershops.C) non-profit organizations.D) large corporations like Canadian Pacific or Alcan Aluminum.E) farms.Answer: CDiff: 2Type: MCPage Ref: 5Skill: ComprehensionObjective: 1.1

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-38) ________ produce most of the goods and services consumed in Canada.A) BusinessesB) Labour unionsC) Non-profit organizationsD) Canadian provincial governmentsE) CharitiesAnswer: ADiff: 1Type: MCPage Ref: 5Skill: ComprehensionObjective: 1.19) Not-for-profit organizationsA) are content with small profits, whereas business firms want large profits.B) are more important than business firms in the Canadian economy.C) use the funds from government grants or from the sale of goods or services to provide serviceto the public.D) sell only services, not goods.E) are not allowed to operate in the manufacturing sector.Answer: CDiff: 2Type: MCPage Ref: 5Skill: ComprehensionObjective: 1.110) If two people exchange an apple, they each still have just one apple, but if they exchangeideas, they now each have two ideas. This is an illustration ofA) the importance of natural resources.B) the principle of specialization of labour.C) the difference between information and all the other factors of production.D) the importance of profit in market economies.E) the importance of government regulation.Answer: CDiff: 2Type: MCPage Ref: 5Skill: ComprehensionObjective: 1.211) The key difference between economic systems is the different ways in which they manageA) the factors of production.B) the transportation of goods within their borders.C) government rules and regulations.D) the payment of workers.E) the degree of competition that is allowed in various domestic industries.Answer: ADiff: 2Type: MCPage Ref: 5Skill: KnowledgeObjective: 1.2

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-412) An economic system isA) an agreement between countries that deals with free trade.B) the way in which a nation allocates its resources among its citizens.C) a government decree that requires certain goods and services to be provided.D) a long standing agreement between citizens and governments on how an economy is run.E) a large government department that oversees how the economy is running.Answer: BDiff: 2Type: MCPage Ref: 5Skill: KnowledgeObjective: 1.213) What does a planned economy rely on a centralized government to do?A) Support free enterprise in every way possibleB) Allocate all or most factors of productionC) Encourage citizens to buy shares of stock in small companiesD) Keep its control activities to a minimumE) Direct workers to start their own small businessesAnswer: BDiff: 2Type: MCPage Ref: 5Skill: KnowledgeObjective: 1.214) In a command economy, the central governmentA) supports free enterprise in every way possible.B) decides on the allocation of all or most factors of production.C) encourages citizens to buy shares of stock in small companies rather than large ones.D) keeps its control activities to a minimum so it doesn't interfere with business efficiency.E) creates shortages on purpose in order to motivate businesses to be more efficient.Answer: BDiff: 2Type: MCPage Ref: 5Skill: KnowledgeObjective: 1.215) In terms of factors of production, Imperial Oil's crude oil reserves are an example of________, while market forecasts are an example of ________.A) labour; entrepreneursB) information; labourC) capital; informationD) natural resources; informationE) information; natural resourcesAnswer: DDiff: 2Type: MCPage Ref: 5Skill: ComprehensionObjective: 1.2

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-516) With regard to factors of production, it is correct to say thatA) natural resources are pretty evenly distributed across different countries.B) the factors of production are managed differently in different countries.C) capital is the most "unfair" factor of production.D) entrepreneurs are a factor of production only in certain countries (e.g., China).E) technology is the most important factor of production.Answer: BDiff: 3Type: MCPage Ref: 5Skill: KnowledgeObjective: 1.217) Entrepreneurs are important because theyA) make and spend lots of money.B) are good at making decisions.C) take risks to start new businesses.D) are usually better managers than non-entrepreneurs.E) sell shares of stock to investors.Answer: CDiff: 2Type: MCPage Ref: 5Skill: ComprehensionObjective: 1.218) Elizabeth wants to set up a consulting business that specializes in mathematical problemsolving. Which of the following factors of production would she require?A) CapitalB) LabourC) Information resourcesD) Natural resourcesE) All of theseAnswer: EDiff: 2Type: MCPage Ref: 5Skill: ComprehensionObjective: 1.219) "Embrace the opportunities and accept the risks" is a phrase thatbestcharacterizes the________ attitude.A) entrepreneurialB) capitalistC) communistD) socialistE) managerialAnswer: ADiff: 2Type: MCPage Ref: 5Skill: ComprehensionObjective: 1.2

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-620) Something that would contributedirectlyto improving labour as a factor of productionwould beA) finding new oil reserves.B) better education for more of the population.C) increasing the purchasing power of employees.D) programs designed to decrease unemployment.E) finding more efficient ways to produce products.Answer: BDiff: 3Type: MCPage Ref: 5Skill: ComprehensionObjective: 1.221) As a factor of production, labour includesA) everyone in a business.B) only non-unionized employees.C) only unionized employees.D) only lower-level managers, not upper-level managers.E) only workers who do production work.Answer: ADiff: 2Type: MCPage Ref: 5Skill: KnowledgeObjective: 1.222) Which of the following is correct with respect to the factors of production?A) The "labour" factor recognizes that it is importance to have labour unions to offset the powerof management.B) "Capital" is a more important factor than "labour."C) As the Canadian economy has become larger and more complex, the importance ofentrepreneurs has declined.D) Unlike land, labour, and capital, information can be shared without being diminished.E) Human resources is an example of the "natural resources" factor.Answer: DDiff: 2Type: MCPage Ref: 5Skill: ComprehensionObjective: 1.223) Natural resources as a factor of production for mining are a practical consideration when amining company considersA) the ease with which ore could be mined.B) the number of miners available to mine the ore.C) the amount of capital required to build the mine.D) the profit that can be made from mining the ore.E) the number of customers who want to buy ore.Answer: ADiff: 3Type: MCPage Ref: 5Skill: ComprehensionObjective: 1.2

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-724) What is the difference between a command economy and a market economy?A) A command economy is found only in communist countries, while a market economy isfound only in capitalist countries.B) A command economy is more efficient than a market economy.C) A market economy gives greater "life satisfaction" to people.D) A command economy relies on centralized government control of the factors of production,while in a market economy supply and demand determine production and allocation decisions.E) There really are no significant differences between a command economy and a marketeconomy.Answer: DDiff: 3Type: MCPage Ref: 5Skill: ComprehensionObjective: 1.225) What can we say about the dollar value of business-to-business (B2B) transactions comparedto the dollar value of business-to-consumer (B2C) transactions?A) B2B transactions have a lower dollar value because there are fewer businesses than there areconsumers.B) The dollar value of B2B transactions exceeds that of B2C transactions.C) The dollar value of B2B transactions must equal the dollar value of B2C transactions.D) It is not possible to determine whether the dollar value of B2B transactions is less than ormore than the dollar value of B2C transactions because of industrial secrecy.E) It is not possible to determine whether the dollar value of B2B transactions is less than ormore than the dollar value of B2C transactions because of data limitations.Answer: BDiff: 2Type: MCPage Ref: 7Skill: ComprehensionObjective: 1.226) The economic system in which producers and consumers control production and allocationdecisions through supply and demand is calledA) a centrally planned economy.B) privatization.C) a market economy.D) communism.E) socialism.Answer: CDiff: 2Type: MCPage Ref: 7Skill: KnowledgeObjective: 1.2

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-827) Which country has a command economy?A) AustraliaB) JapanC) CanadaD) GermanyE) North KoreaAnswer: EDiff: 1Type: MCPage Ref: 7Skill: ComprehensionObjective: 1.228) Which of the following is correct with regard to the communist economic system?A) The centralized planning emphasis on capital equipment and military hardware has causeddeclines in the prices of consumer goods.B) Government ownership of the means of production is only temporary.C) Most government-operated enterprises are very efficient because of central planning.D) Overall production expands rapidly because of central planning.E) The government owns and operates all sources of production.Answer: EDiff: 2Type: MCPage Ref: 7Skill: ComprehensionObjective: 1.229) Stanislav lives in a country where all the factors of production are owned by the government.The economic system in his country ismost likelyA) communism.B) capitalism.C) mixed market.D) socialism.E) it is not possible to tell with the information provided.Answer: ADiff: 2Type: MCPage Ref: 7Skill: ComprehensionObjective: 1.230) John lives in a country where producers and consumers control production, and whereallocation decisions are made through the mechanism of supply and demand. John lives in acountry with a ________ economy.A) privatizedB) socialistC) communistD) marketE) nationalizedAnswer: DDiff: 2Type: MCPage Ref: 7Skill: ComprehensionObjective: 1.2

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-931) A GlobeScan poll showed that the highest support for the free market economy was found inA) Japan.B) China.C) the United States.D) Canada.E) Brazil.Answer: BDiff: 2Type: MCPage Ref: 7Skill: KnowledgeObjective: 1.232) A major drawback to communism as an economic system is thatA) government control of the factors of production is only temporary.B) people don't like communism.C) individuals contribute according to their ability.D) individuals receive economic benefits according to their needs.E) production of goods and services is inefficient because of the lack of a profit incentive.Answer: EDiff: 3Type: MCPage Ref: 7Skill: ComprehensionObjective: 1.233) Command economies are most likely to be found inA) the newly emerging economies of southeast Asia.B) communist and socialist nations.C) western European countries.D) Japan.E) Canada and the United States.Answer: BDiff: 2Type: MCPage Ref: 7Skill: ComprehensionObjective: 1.234) An economy that has a strong central government that controls labour, capital, and naturalresources and has few entrepreneurs is aA) market economy.B) command economy.C) free-enterprise economy.D) capitalist economy.E) oligopolistic economy.Answer: BDiff: 1Type: MCPage Ref: 7Skill: KnowledgeObjective: 1.2

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-1035) Communism and socialism areA) basic forms of market economies.B) becoming more popular.C) extreme opposites.D) basic forms of command economies.E) identical forms.Answer: DDiff: 2Type: MCPage Ref: 7Skill: KnowledgeObjective: 1.236) Mexico allows producers and consumers to make production and allocation decisionsthrough the mechanism of supply and demand. Such a system is calledA) socialism.B) communism.C) privatization.D) nationalization.E) a market economy.Answer: EDiff: 1Type: MCPage Ref: 7Skill: ComprehensionObjective: 1.237) Socialist economies may stifle economic growth becauseA) management positions in state-controlled industries are often filled on the basis of politicalconsiderations.B) they have too few regulations concerning product safety.C) they are found in countries where people don't have many skills.D) they are usually found in countries with cold climates.E) they encourage excessive unionization of employees.Answer: ADiff: 3Type: MCPage Ref: 7Skill: ComprehensionObjective: 1.238) An economic system that permits private ownership and control of small businesses butwhere the government controls large critical industries is known asA) a mixed economy.B) socialism.C) communism.D) capitalism.E) mercantilism.Answer: BDiff: 1Type: MCPage Ref: 7Skill: KnowledgeObjective: 1.2

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-1139) Which of the following statements is correct?A) Sweden is the best example of a country with a pure socialist economy.B) A GlobeScan poll found that the greatest support for the free market economy was foundamong the citizens of India.C) The United States is a pure capitalist economy.D) Many countries in the world have a purely communist economy.E) Under socialism, smaller businesses are often privately owned.Answer: EDiff: 3Type: MCPage Ref: 7Skill: ComprehensionObjective: 1.240) Which of the following is correct with regard to the issue of different economic systems?A) There is a general consensus that command economies are more efficient than marketeconomies because a centralized government can consider a wider range of economic factorswhen decisions are made.B) In recent years, more and more countries have rejected communism and embraced moremarket-based economies.C) Socialism is the most extensive command economic system because government owns all themajor industries.D) A GlobeScan poll of 20 000 people in 20 different countries showed that support for a freemarket economy was most pronounced in Singapore.E) All of these are correct.Answer: BDiff: 2Type: MCPage Ref: 7Skill: ComprehensionObjective: 1.241) Socialism is best described asA) a kind of command economy in which the government owns and operates all industries.B) a kind of command economy in which the government owns and operates large criticalindustries.C) an economy that is free from any regulation or planning.D) a market economy in which markets decide what, when, and how much to produce.E) an economic system with elements of a market economy, but not a planned economy.Answer: BDiff: 2Type: MCPage Ref: 7Skill: ComprehensionObjective: 1.2

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-1242) Market economies have all of the following characteristics,exceptthat theyA) allow businesses to charge whatever they want for their products and services.B) encourage entrepreneurship by offering profits as an incentive.C) require government intervention in order to prosper.D) rely on markets, not governments, to decide what, when, and for whom to produce.E) allow customers free choice.Answer: CDiff: 2Type: MCPage Ref: 7Skill: ComprehensionObjective: 1.243) Which of the following is correct with respect to privatization and deregulation?A) Deregulation yields higher economic performance than privatization.B) Privatization only works in socialist countries.C) Privatization means converting companies that are in financial trouble into government-controlled organizations.D) The trend toward both privatization and deregulation slowed somewhat after the financialcrisis of 2008.E) They mean essentially the same thing.Answer: DDiff: 3Type: MCPage Ref: 8Skill: ComprehensionObjective: 1.244) Canada is home to a(n) ________ economy.A) mixed marketB) oligopolisticC) socialistD) marketE) commandAnswer: ADiff: 2Type: MCPage Ref: 8Skill: KnowledgeObjective: 1.245) Market economies are considered beneficial for small businesses because theyA) provide small businesses with lots of government assistance and protection.B) provide a central economic plan within which small businesses can easily prosper.C) protect small businesses from the power of large corporations.D) allow small businesses to fail.E) allow the business to do whatever it wants as long as it doesn't break the law.Answer: EDiff: 2Type: MCPage Ref: 7Skill: ComprehensionObjective: 1.2

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-1346) In which economic system will profit motivate entrepreneurs to use resources efficiently andto produce goods that consumers want?A) A centrally planned economyB) CommunismC) A market economyD) SocialismE) A barter economyAnswer: CDiff: 1Type: MCPage Ref: 7Skill: KnowledgeObjective: 1.247) Jose is from Guatemala. He is unsure about the nature of business in Canada. You point outthat a typical business in Canada operates in fundamentally the same way as a business inA) the People's Republic of China.B) Poland.C) Peru.D) England.E) Japan.Answer: DDiff: 3Type: MCPage Ref: 5Skill: ComprehensionObjective: 1.248) Which of the following is correct with respect to input and output markets?A) In the input market, firms supply goods and services in response to demand on the part ofhouseholds.B) In the output market, firms buy resources from households, which then supply thoseresources.C) Consumer buying patterns provide information that helps companies decide which products toproduce.D) Consumers are restricted in the companies they can work for.E) Input and output markets exist only in communist countries.Answer: CDiff: 3Type: MCPage Ref: 7-8Skill: ComprehensionObjective: 1.2

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-1449) Which of the following is correct with respect to mixed market economies?A) They have features that are not found in either command or market economies.B) As a result of the financial crisis of 2008, there is a trend toward increased governmentregulation of business in mixed market economies.C) Very few countries have this type of system.D) There is a trend toward increased government ownership of business in mixed marketeconomies.E) The mixed market economy is the best type of economic system.Answer: BDiff: 2Type: MCPage Ref: 8Skill: ComprehensionObjective: 1.250) The federal government sold the Lester B. Pearson International Airport in Toronto to agroup of entrepreneurs, which then set up the Greater Toronto Airports Authority. This sale is anexample ofA) socialism.B) freedom of choice.C) entrepreneurship.D) deregulation.E) privatization.Answer: EDiff: 2Type: MCPage Ref: 8Skill: ComprehensionObjective: 1.251) Which of the following is correct with respect to privatization?A) The TNT Post Group in the Netherlands has been converted from private to governmentownership.B) Privatization is most likely to occur in communist countries.C) Privatization has been a general trend during the last decade, but some countries are going inthe opposite direction and pursuing nationalization instead.D) Several companies have been nationalized in Canada in recent years.E) The recession of 2008 accelerated the trend toward privatization.Answer: CDiff: 3Type: MCPage Ref: 8Skill: ComprehensionObjective: 1.2

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-1552) The role of government in our economic system includes all of the followingexceptA) customers.B) innovators.C) competitors.D) regulators.E) taxation agents.Answer: BDiff: 2Type: MCPage Ref: 9-11Skill: KnowledgeObjective: 1.353) Sandy is responsible for monitoring compliance with regulations in her company. She needsto know that the important areas of government regulation areA) protecting competition and upholding environmental regulations.B) protecting social goals, upholding environmental regulations, and protecting shareholderrights.C) protecting competition, protecting consumers, and upholding environmental regulations.D) protecting competition, protecting consumers, protecting social goals, and protecting theenvironment.E) protecting shareholder rights, and following business law.Answer: DDiff: 2Type: MCPage Ref: 9-10Skill: ComprehensionObjective: 1.354) The Canada Consumer Product Safety Act replaces theA) Hazardous Products Act.B) Food and Drug Act.C) Weights and Measures Act.D) Advertising and Packaging Act.E) Textile Labelling Act.Answer: ADiff: 2Type: MCPage Ref: 10Skill: KnowledgeObjective: 1.3

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-1655) Which of the following is correct with regard to the Competition Act?A) A company can cut prices in one region of Canada while selling at a higher price everywhereelse even if this substantially lessens competition.B) Businesses are generally satisfied that the Competition Bureau moves fairly quickly inapproving or denying merger plans.C) Pyramid selling is permitted as long as participant know they are involved in a pyramidselling scheme and they know they are not allowed to make windfall profits from the scheme.D) The mere existence of a conspiracy is assumed to be proof that competition has been reduced.E) All of these are correct.Answer: DDiff: 3Type: MCPage Ref: 9Skill: ComprehensionObjective: 1.356) Madeline is responsible for answering questions about what her company can do under theCompetition Act. Which one of the following is allowed under the Act?A) The return of surpluses by credit unions to their membersB) Pricing products unreasonably low to eliminate competitionC) Forming a merger or a monopoly that lessens competitionD) Refusing to sell to a retailer who will, in turn, sell the product significantly below thesuggested retail priceE) Giving selective allowances and rebates to cover advertising expenses to specific retailersAnswer: ADiff: 2Type: MCPage Ref: 9Skill: ComprehensionObjective: 1.357) Which of the following is correct regarding the Competition Act?A) The Act prohibits agreements between companies that reduce competition.B) The government has to prove that agreements between companies actually reducecompetition.C) Recent changes to the Act have reduced fines for misleading marketing practices because ithas been shown that these fines don't have any effect.D) Surveys of business executives show that they think the Competition Bureau is actually quitequick in approving or denying merger requests.E) All of the above.Answer: ADiff: 1Type: MCPage Ref: 9Skill: ComprehensionObjective: 1.3

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-1758) In 2014, Netflix was told to submit information about its Canadian subscribers to the CRTC,but it refused to do so, arguing that the CRTC didn't have any jurisdiction over online media.When the CRTC simply dropped the issue, this showed thatA) the CRTC does not have any power over companies that provide cable or televisionentertainment.B) the top management of CRTC is incompetent.C) the top management of the CRTC is not knowledgeable about companies that provideentertainment.D) the CRTC does not have right to control broadcast content that is provided over the Internet.E) it is unclear what jurisdiction the CRTC has in enforcing Canadian content rules.Answer: EDiff: 3Type: MCPage Ref: 9Skill: ComprehensionObjective: 1.359) Why are sales taxes called regressive taxes?A) Because food and drugs are often exemptB) Because the more one makes, the lower the rate of sales tax that is applied to one's purchasesC) Because poorer people pay a higher percentage of their income than richer peopleD) Because it applies to sales taxesE) Because they discourage the purchase of some productsAnswer: CDiff: 3Type: MCPage Ref: 11Skill: ComprehensionObjective: 1.360) John has just received a rather large increase in salary, but he is upset because he feels thathe should not be charged a higher rate of tax on this extra money. John is being taxed by a________ tax system.A) provincialB) federalC) progressiveD) restrictiveE) regressiveAnswer: CDiff: 2Type: MCPage Ref: 11Skill: KnowledgeObjective: 1.3

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-1861) Which of the following is correct with respect to the issue of government taxation?A) Progressive revenue taxes are harder on low-income people than on high-income people.B) Revenue taxes are designed primarily to encourage people to buy certain kinds of goods andavoid buying other kinds.C) Restrictive taxes prevent businesses from expanding.D) Regressive revenue taxes are levied at the same rate regardless of a person's income.E) All of the statements are correct.Answer: DDiff: 2Type: MCPage Ref: 11Skill: ComprehensionObjective: 1.362) The GST is considered a regressive tax becauseA) food and drugs are often exempt.B) the more a person makes, the lower the rate of sales tax applied to that person's purchase.C) it is unfair.D) poorer people pay a higher percentage of their income than richer people.E) it is designed to discourage the purchase of certain products.Answer: DDiff: 2Type: MCPage Ref: 11Skill: ComprehensionObjective: 1.363) Incentive programs are designed toA) encourage families to have more babies.B) encourage businesses to locate in economically depressed parts of the country.C) create "corporate welfare bums."D) encourage families to move to depressed parts of the country.E) reimburse businesses for making unprofitable but necessary products.Answer: BDiff: 2Type: MCPage Ref: 11Skill: ComprehensionObjective: 1.364) Which law forbids most monopolies in Canada?A) Consumer Protection ActB) Lobbying ActC) Fair Trade ActD) Competition ActE) Environmental Contaminants ActAnswer: DDiff: 1Type: MCPage Ref: 9Skill: KnowledgeObjective: 1.3

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-1965) Nutrition labelling and claims are intended to provide consumers with information to aidthem in the selection of a healthy diet aimed at reducing risk of premature illness and death dueto diet-related chronic diseases. Insufficient labelling is a violation of which act?A) Food and Drug ActB) Weights and Measures ActC) Advertising and Packaging ActD) Textile Labelling ActE) Consumer Protection ActAnswer: ADiff: 2Type: MCPage Ref: 10Skill: KnowledgeObjective: 1.366) Which of the following statements ismostcorrect with respect to government in its role asregulator?A) Business complains that the Competition Bureau is too slow in approving or denying mergerplans.B) The government really has very little power in its role as regulator.C) Because of the move toward deregulation, federal and provincial governments have becomeless and less involved in regulating business activity.D) The main areas of government regulation of business are achieving social goals, protectingconsumers, and providing assistance to small business firms.E) Studies have shown that government regulation reduces the effectiveness of business firms.Answer: ADiff: 2Type: MCPage Ref: 9Skill: ComprehensionObjective: 1.367) Which of the following is correct with regard to public-private partnerships?A) These partnerships have resulted in windfall profits for the businesses that have gotteninvolved in them.B) These partnerships have resulted in bad public relations for the businesses that have gotteninvolved in them.C) These partnerships have created a monopoly situation for the businesses that have gotteninvolved in them.D) These partnerships cost more money than the traditional approach (where the governmentputs up the money and then hires contractors to do the necessary work).E) These partnerships have generally been failures in terms of the quality of service provided.Answer: DDiff: 3Type: MCPage Ref: 11Skill: ComprehensionObjective: 1.3

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-2068) When Labatt Brewing sales representatives gave money to store operators who agreed to notlower prices on some brands of beer, the company was prosecuted for engaging inA) bait-and-switch advertising.B) resale price maintenance.C) a pyramid scheme.D) selling mislabeled products.E) a violation of the Beer Act.Answer: BDiff: 2Type: MCPage Ref: 10Skill: ComprehensionObjective: 1.369) The three main ways in which business can influence government policy areA) advertising, lobbyists, and trade associations.B) political contributions, letters to the editors of newspapers, and advertising.C) advertising, trade associations, and political contributions.D) trade associations, lobbyists, and letters to the editors of newspapers.E) lobbyists, political contributions, and advertising.Answer: ADiff: 2Type: MCPage Ref: 11Skill: ComprehensionObjective: 1.370) The federal Lobbying Act requires lobbyists toA) register with the Department of Consumer and Commercial Relations.B) contribute a minimum of $10 000 to political campaigns.C) attend at least two sessions in the House of Commons each year.D) report on their communications with designated public office holders.E) meet with members of Parliament on a regular basis.Answer: DDiff: 2Type: MCPage Ref: 12Skill: KnowledgeObjective: 1.371) Suppose that several microelectronics manufacturers want to set up a trade association. Theyneed to know that trade associations are allowed to do all of the followingexceptA) allocate markets for their members.B) influence the kind of legislation that is passed.C) conduct training programs relevant to the industry.D) arrange trade shows.E) publish newsletters featuring articles on new products.Answer: ADiff: 2Type: MCPage Ref: 12Skill: ComprehensionObjective: 1.3

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-2172) The price at which the quantity of goods demanded and the quantity of goods supplied areequal is referred to asA) the going rate.B) the point-of-no-return price.C) the market price.D) the highest price.E) the lowest price.Answer: CDiff: 2Type: MCPage Ref: 13Skill: KnowledgeObjective: 1.473) In a small town of 3,000 people, the number of car washes has grown from two to five in thelast two months. Which result will likely occur?A) The increase in supply will have no effect on the equilibrium price.B) The increase in supply will lead to a decrease in demand.C) The increase in supply will lead to a decrease in the equilibrium price.D) The increase in supply will lead to an increase in demand.E) The increase in supply will lead to an increase in equilibrium price.Answer: CDiff: 2Type: MCPage Ref: 13Skill: KnowledgeObjective: 1.474) The term "demand" refers toA) the stock exchange.B) the willingness and ability of buyers to purchase a product or service.C) the willingness and ability of businesses to sell a product or service.D) the willingness of buyers to accept high prices for high quality goods.E) the willingness of government to sell goods and services.Answer: BDiff: 2Type: MCPage Ref: 12Skill: KnowledgeObjective: 1.475) What is "demand"?A) The idea that buyers will purchase more of a product as the price dropsB) The price and quantity of a product at which the quantity demanded is equal to the quantitysuppliedC) The idea that producers will offer more of a product as the price risesD) The willingness and ability of buyers to purchase a productE) None of theseAnswer: DDiff: 2Type: MCPage Ref: 12Skill: KnowledgeObjective: 1.4

Test Bank For Business Essentials, Eighth Canadian Edition 8th Edition - Page 24 preview image

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-2276) With regard to demand and supply in a market economy, it is correct to say thatA) demand refers to the price that consumers are willing to pay for a product.B) the demand and supply schedule indicates how many units of a given product will be sold atdifferent prices.C) demand and supply curves are used to determine the demand and supply schedule.D) equilibrium prices are only rarely achieved.E) if a seller tried to increase profits by making more products to sell, the result would be a moreefficient use of resources because economies of scale would be achieved.Answer: BDiff: 2Type: MCPage Ref: 12Skill: ComprehensionObjective: 1.477) The law of demand states thatA) producers will offer more of a product as the price falls.B) demand and supply meet at an equilibrium point.C) buyers will purchase more of a product as the price falls.D) producers will offer more of a product as the price rises.E) buyers will purchase more of a product as the price rises.Answer: CDiff: 1Type: MCPage Ref: 12Skill: KnowledgeObjective: 1.478) The law of supply states thatA) buyers will purchase more of a product as the price falls.B) demand and supply meet at an equilibrium point.C) producers will offer more of a product as the price rises.D) producers will offer more of a product as the price falls.E) buyers will purchase more of a product as the price rises.Answer: CDiff: 1Type: MCPage Ref: 12Skill: KnowledgeObjective: 1.479) What is "supply"?A) The idea that sellers will sell more of a product as the price increasesB) The price and quantity of a product at which the quantity demanded is equal to the quantitysuppliedC) The idea that buyers will want less of a product as the price increasesD) The willingness and ability of producers to offer a good or service for saleE) None of theseAnswer: DDiff: 2Type: MCPage Ref: 12Skill: KnowledgeObjective: 1.4

Test Bank For Business Essentials, Eighth Canadian Edition 8th Edition - Page 25 preview image

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-2380) Ian, the owner of 5-for-1 Pizza, has noticed that when he increases the price of his pizzas by$2.00, the number of pizzas that he sells drops by 30 percent. Ian has discoveredA) the law of supply and demand.B) the supply curve.C) the demand curve.D) the law of supply.E) the law of demand.Answer: EDiff: 1Type: MCPage Ref: 12Skill: ComprehensionObjective: 1.481) Kristine discovered that when she dropped the price of her paintings, more people wereasking her to create paintings for them. Kristine is experiencingA) the law of supply and demand.B) market price variations.C) the law of supply.D) economic justice.E) the law of demand.Answer: EDiff: 2Type: MCPage Ref: 12Skill: ComprehensionObjective: 1.482) A demand and supply scheduleA) allows assessment of the relationship between different levels of demand and supply atdifferent prices.B) describes the supply for a product.C) describes the demand for a product.D) is a formula by which one determines market equilibrium.E) is the contractual agreement made between the buyer and seller.Answer: ADiff: 2Type: MCPage Ref: 12Skill: ComprehensionObjective: 1.483) Which term is used to identify the willingness and ability of buyers to purchase a product?A) ObligationB) DemandC) WealthD) ProfitsE) ProsperityAnswer: BDiff: 1Type: MCPage Ref: 12Skill: KnowledgeObjective: 1.4

Test Bank For Business Essentials, Eighth Canadian Edition 8th Edition - Page 26 preview image

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-2484) A producer of automobile batteries notes that the price of batteries has risen over each of thepast three years. The firm decides to expand its battery production. This illustratesA) the law of supply.B) the law of market price.C) the law of equilibrium.D) the law of demand.E) the law of supply and demand.Answer: ADiff: 2Type: MCPage Ref: 12Skill: ComprehensionObjective: 1.485) The point at which the quantity of a product or service demanded is the same as the quantitysupplied is calledA) the surplus point.B) the equilibrium point.C) the supply point.D) the profit point.E) the demand point.Answer: BDiff: 1Type: MCPage Ref: 12Skill: KnowledgeObjective: 1.486) At the point where the supply curve crosses the demand curve on a graphA) no profits will be made.B) all products offered for sale will be sold.C) a shortage will result if the price is too low.D) no sales will be made.E) a surplus will result if the price is too low.Answer: BDiff: 1Type: MCPage Ref: 12Skill: ComprehensionObjective: 1.487) The points on a curve showing the relationship between the price of a good or service and thequantity of that good or service willing to be produced is known as theA) equilibrium curve.B) demand curve.C) balance curve.D) variable price curve.E) supply curve.Answer: EDiff: 1Type: MCPage Ref: 12Skill: KnowledgeObjective: 1.4

Test Bank For Business Essentials, Eighth Canadian Edition 8th Edition - Page 27 preview image

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-2588) The points on a curve showing the relationship between the price of a good or service and thequantity of that good or service which customers will purchase is known as theA) variable price curve.B) equilibrium curve.C) demand curve.D) supply curve.E) balance curve.Answer: CDiff: 1Type: MCPage Ref: 12Skill: KnowledgeObjective: 1.489) Equilibrium in the market is attained whenA) the laws of supply and demand interact to set the price and quantity of a product at whichbuyers and sellers agree.B) there are no dramatic changes in the market over time.C) suppliers are willing to produce the quantity demanded.D) no single firm has more than 50 percent of the market.E) consumers are willing to pay the price being charged.Answer: ADiff: 2Type: MCPage Ref: 12Skill: ComprehensionObjective: 1.490) The price at which the quantity of a product willing to be purchased by customers and thequantity of product willing to be made by a producer are equal is known asA) the break-even price.B) the oligopoly price.C) the balanced price.D) the elastic price.E) either the market price or the equilibrium price.Answer: EDiff: 2Type: MCPage Ref: 12Skill: KnowledgeObjective: 1.4

Test Bank For Business Essentials, Eighth Canadian Edition 8th Edition - Page 28 preview image

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-2691) Ernesto's Pizza is about to offer customers a new variety of a personal pizza. Which of thefollowing actions by Ernesto's Pizza wouldmostlikely prevent a surplus or a shortage of thepersonal pizzas in its first week?A) Limit the supply of the personal pizzaB) Lower demand for the personal pizzaC) Set the price of substitute goodsD) Estimate the market price of the personal pizzaE) Lower the price of the pizza throughout the weekAnswer: DDiff: 2Type: MCPage Ref: 14Skill: KnowledgeObjective: 1.492) If the equilibrium point of 5-for-1 Pizza is 2000 pizzas per week and $10.00 per pizza, andthe owner decides to make 1900 pizzas and sell them at the same price, what is the likelyoutcome?A) The business will have less expenses and also have greater profit.B) The business will have a shortage.C) The business will make more profit.D) The business will have a surplus.E) The business will have less expenses but no more profit.Answer: BDiff: 2Type: MCPage Ref: 14Skill: ComprehensionObjective: 1.493) 5-for-1 Pizza is operating at the point where the supply curve intersects the demand curve. Ifthe owner decides to increase the price and not change the production level, what will result?A) A shortageB) A surplusC) More profitD) A shift in the supply curveE) A shift in the demand curveAnswer: BDiff: 2Type: MCPage Ref: 14Skill: ComprehensionObjective: 1.4

Test Bank For Business Essentials, Eighth Canadian Edition 8th Edition - Page 29 preview image

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-2794) The market research department of BSX Corp. estimated that 5000 CDs would be purchasedat a price of $8.00 each. As it turned out, the demand was 6000. The company is in a(n)________ condition.A) shortageB) growthC) inflationD) surplusE) depressionAnswer: ADiff: 2Type: MCPage Ref: 14Skill: ComprehensionObjective: 1.495) If the market for chocolate was at the equilibrium point and suddenly half of the chocolate inthe world disappeared, what would be the immediate effect?A) The price would increase due to a shortage.B) The price would decrease due to market equilibrium.C) The price would increase due to a surplus.D) The price would decrease due to a surplus.E) There would be no change in either price or demand.Answer: ADiff: 2Type: MCPage Ref: 14Skill: ComprehensionObjective: 1.496) Which of the following is correct with respect to the issue of supply and demand?A) A demand curve shows that consumers usually demand products of higher quality.B) A supply curve shows that businesses will supply more units of a product, but will lower thelevel of product quality.C) It is difficult to achieve an equilibrium price.D) When the quantity demanded exceeds the amount supplied, businesses shut down.E) None of the statements are correct.Answer: EDiff: 2Type: MCPage Ref: 13Skill: ComprehensionObjective: 1.497) An exchange process between buyers and sellers of a particular good or service is known asA) a market.B) economic trade.C) mercantilism.D) supply utility.E) bartering.Answer: ADiff: 2Type: MCPage Ref: 12Skill: KnowledgeObjective: 1.4

Test Bank For Business Essentials, Eighth Canadian Edition 8th Edition - Page 30 preview image

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-2898) In the production of wheat, the law of demandA) states that buyers will purchase more wheat as the price decreases.B) reflects the farmer's desire to increase wheat production.C) comes into play when farmers produce a bumper crop of wheat.D) refers to the exchange process between the farmer and the buyer of wheat.E) states that at very high prices, there will be no supply.Answer: ADiff: 2Type: MCPage Ref: 12Skill: ComprehensionObjective: 1.499) In economic terms, a "market" isA) available in capitalist nations, but not in communist nations.B) located where buyers can most easily access it.C) the physical location (for example, a grocery store) where exchanges take place betweenbuyers and sellers.D) an exchange process between sellers and buyers.E) all of the above.Answer: DDiff: 2Type: MCPage Ref: 12Skill: KnowledgeObjective: 1.4100) What is likely to happen when demand for a commodity is high?A) Consumers will try to find substitutes for the commodity.B) The price of the commodity will rise.C) Criminal behaviour increases with regard to the commodity (e.g., stealing).D) The price of substitute commodities will increase.E) All of these statements are correct.Answer: EDiff: 2Type: MCPage Ref: 14Skill: ComprehensionObjective: 1.4101) Tom, a real estate agent, wants to convince a potential customer where the price should beset to sell their home. Tom could use aA) variable cost curve.B) demand and supply schedule.C) supply curve.D) demand curve.E) property analysis.Answer: BDiff: 2Type: MCPage Ref: 13Skill: ComprehensionObjective: 1.4

Test Bank For Business Essentials, Eighth Canadian Edition 8th Edition - Page 31 preview image

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Business Essentials,8ceChapter 1: Understanding the Canadian Business System1-29102) A new sales tax has the effect of shifting the supply curve upward. This will generally movethe equilibrium pointA) down and to the left.B) up and to the right.C) down and to the right.D) up and to the left.E) it has no effect on the equilibrium point.Answer: DDiff: 2Type: MCPage Ref: 13Skill: ComprehensionObjective: 1.4103) Private enterprise requires which four elements to function effectively?A) Communism, capitalism, socialism, and privatizationB) The right to product safety, consumer choice, freedom of information, and no governmentintervention in businessC) Land, labour, capital, and entrepreneurshipD) Supply, demand, equilibrium, and monopolyE) Private property rights, freedom of choice, profits, and competitionAnswer: EDiff: 2Type: MCPage Ref: 14Skill: KnowledgeObjective: 1.5104) After checking out a new car deal at her local GM Canada dealership, Sally decided to buyone. Which of the followingbestdescribes what happened?A) Sally exercised her freedom of choice.B) General Motors exercised its freedom of choice.C) Both General Motors and Sally exercised their freedom of choice.D) This example doesn't relate to freedom of choice.E) Neither General Motors nor Sally exercised their freedom of choice because they were bothforced into their respective roles.Answer: CDiff: 2Type: MCPage Ref: 14Skill: ComprehensionObjective: 1.5

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